Employers and health plans are exploring new payment schemes with strong incentives geared toward providers. Some are experimenting with pay-for-performance programs. At least 100 such programs are in operation today in the U.S., and some have shown promising results. These programs, however, are in their infancy and lack the standardized performance measures, electronic medical records, and connectivity they need to be truly effective.
Strengthening the system’s transparency, innovation, and incentives will reshape the health-care value chain. Existing players will battle new entrants for market leadership roles and will have to reconsider the roles they do play. They’ll need new capabilities and new ways of doing business. Players may need to move beyond care provision or drug manufacturing, for example, to assume a more advisory role, to help consumers align individual demand with supply-side options. Our survey indicates that consumers may be open to new offerings — for example, individualized care management programs and performance guarantees for prescription drugs.
The least-understood aspect of the retail health-care market is the fledgling hybrid role that will exist between supply and demand to help consumers navigate the complexities of health care. The players that have traditionally held intermediary roles — employers, government, and health plans — do not inspire trust in consumers, nor do they answer all the consumers’ needs. The new intermediaries will identify consumer needs and steer the supply side to answer them. Further, they will catalyze change as suppliers’ inadequacies become more obvious. Though they have barely started to take shape, these new intermediaries will be a potent force in determining which players succeed and which fail in a consumer-centric retail health-care market.
We’re already seeing entrants in this burgeoning space. AOL founder Steve Case is bringing Revolution Health to market in 2007, after spending hundreds of millions on acquisitions, with an information/community portal, a network of RediClinics, a health concierge service, and a consumer-driven health insurance marketplace. Financial-services companies like Fidelity are also, as mentioned above, moving into this business. They will not be alone.
We see three important intermediary roles in the near future: market makers, solution providers, and health–wealth managers:
• Market Makers. Every large market in the nation will need transparent, objective, and reliable information on pricing, quality, and service. Over the longer term, this arena may evolve to include such features as spot pricing, offering discounts for care at less busy times. Insurers already have skills and databases that they could leverage for such a play, but they will most likely need to partner with third parties that are viewed as more objective and trusted. Groups like the American Heart Association or the American Cancer Society could become market makers for disease information or a seal of approval.
• Solution Providers. Solution providers are emerging to bring evidence-based treatments to consumers, especially to those with difficult, chronic, or expensive conditions. We can see the outlines of a “bundler” role: Instead of offering services à la carte for diseases like diabetes, providers could handle the entire treatment of a disease over a person’s life. In Redefining Health Care, Porter and Teisberg recommend packaging best-of-breed treatments into an easily purchased bundle and then taking responsibility for the result, such as lower blood sugar levels or fewer ER visits. These players will be the masters of disease management, and it is possible to imagine some CDHPs requiring participation in such programs as a condition of continued enrollment. The space will offer some of the most interesting opportunities in the long term, especially for market-leading providers with exceptional skills and experience. Eventually, we can see this role combine with that of the market maker.